January ferrous scrap tags in US seen on the rise

Most players in the trade thought prices would increase by $20 per gross ton (gt). This is predominantly what has happened. Prices at most mills in all districts have moved up $20/gt from December levels, sources said.

What is unclear at this point are the actual prices, especially for #1 Busheling.  Last month, #1 Busheling went sideways, except for a few mills that insisted on dropping pricing by $20/gt. This was generally resisted by suppliers except for what they had already delivered on the infamous “TBD” orders. Some mills that attempted to drop $20/gt in December finally agreed to only drop $10/gt. It is not certain all mills were able to buy all the scrap they needed at a $20/gt increase over December.

A source in the Southeast told SMU prices for both shredded and busheling jumped a solid $20/gt in the Southern region.

SMU spoke to a broker in the Ohio Valley about the state of the market. He said prices of up $20/gt may not be enough to draw the necessary scrap. He has heard of mills paying prices considerably above the $20/gt increase just to keep scrap in their district flowing to them. 

“The market should have never gone down in December,” he said, in a reference to the buyers who spurned a sideways move. 

Now, they may have to play catch-up in the middle of winter. 

Speaking of winter, we are having one at the moment, and it has affected obsolescent flows into dealers’ yards. A trader based in Pittsburgh told SMU that yards he deals with are telling him there is scant traffic from peddlers over the scale. The current weather across the interior should slow scrap movement at every level at least the for a few days.

Some market participants are predicting further price increases in February.